Benchmark indices rose on Thursday, driven by IT stocks such as Infosys and Tata Consultancy Services on the back of a weak rupee.

The S&P BSE Sensex ended at 34,663, up 318 points while the broader Nifty50 index settled at 10,514, up 84 points.

The rupee has weakened by more than 7% so far this year, hitting its lowest since December 2016 at 68.46 per dollar on Wednesday, as surging crude oil prices weigh on India, the world’s third largest importer of the commodity, raising fears that soaring costs could drive up inflation and widen the trade deficit.

The Nifty IT index rose over 2%, its biggest intraday gain in nearly four weeks, and has gained 18% so far this year. Infosys rose as much as 2.9% and TCS climbed 3%.

Meanwhile, Oil and Natural Gas Corporation (ONGC) trimmed losses to end 4% lower after falling 10% in intra-day trade after the media reports suggested that the government may ask the company to share the burden to reduce fuel price.

GLOBAL MARKETS

In the global markets, Asian shares fell on Thursday after the US government launched a national security probe into car imports that could lead to new tariffs, and President Donald Trump’s comments suggested setbacks in US-China trade talks.

In commodities markets, US crude was down 0.3 per cent at $71.63 a barrel. Oil prices fell on Wednesday after an unexpected rise in US crude and gasoline inventories. Brent futures were 0.4 per cent lower at $79.50 a barrel, continuing to move lower after rising above $80 last week for the first time since November 2014 last week.

The S&P BSE Sensex ended at 34,663, up 318 points while the broader Nifty50 index settled at 10,514, up 84 points.

03:14pm

Avenue Supermarts up 6% after block deals

Shares of Avenue Supermarts - the operators of retail chain D-Mart, have moved higher by 6% to Rs 1,437 on the BSE in noon deal trade on Thursday, after nearly one per cent or 5 million equity shares of the company changed hands through multiple block deals. READ MORE

03:00pm

Crude oil price rise could moderate later, suggests Spanish survey

FocusEconomics, a Spain-based economic think tank, says after surveying economists and analysts: “We do not expect the current sweet spot in oil prices will be sustainable further down the road. Higher prices are allowing an increasing number of shale oil producers to ramp up production, especially in the United States. More, rising trade disputes and elevated political tensions across the globe are threatening to derail an otherwise promising global growth trajectory. Prices could be averaging $66.5 a barrel in Q4 (October to December) of 2018.” READ MORE

Despite the country's largest lender, State Bank of India (SBI), reporting its biggest quarterly loss of Rs 77 billion and a worsening of asset quality during January-March 2018 (Q4) on Monday, the Nifty index of PSU banks surged 2.8 per cent on Tuesday. The gains came on a day the Nifty and the Sensex fell by almost 1 per cent each.

According to experts, even though the Q4 numbers of PSBs that have announced results so far are weaker than expected, earnings visibility is emerging and, in all probability, asset quality worries of PSBs have peaked. READ MORE

02:29pm

Mid, small-caps outperform in four years of Narendra Modi government

Mid-and small-cap indices have outperformed large-caps in the four years of Narendra Modi – led National Democratic Alliance (NDA) at the centre. Between May 26, 2014 when the Modi government was sworn in and May 23, 2018, the S&P BSE Mid-cap and the S&P BSE Small-cap indices have rallied 86 per cent and 81 per cent respectively, as compared to around 39 per cent rise in the S&P BSE Sensex, ACE Equity data shows.

Analysts attribute this outperformance to the government’s proactive economic reform measures and low crude oil prices that translated into a better operational performance for the mid-and-small cap companies that eventually got translated into the stocks rallying at the bourses. Ample liquidity, especially from the mutual funds also aided sentiment, they said.

02:14pm

ONGC falls 10%

Oil and Natural Gas Corporation (ONGC) dipped 10% to Rs 157, extending its previous day’s nearly 5% fall on BSE, after the media report suggested that the government may ask the company to share the burden to reduce fuel price. READ MORE

Deteriorating macroeconomic conditions and lacklustre earnings have prompted brokerages to cut their price targets for mid- and small-cap stocks. Over three-fourths of the BSE 500 stocks saw their price targets cut in the last three months, with 98 stocks witnessing a downgrade of more than 10 per cent. READ MORE

Shares of information technology (IT) companies were trading higher as rupee extended weakness against the dollar. The frontline IT stocks such as Infosys, Tata Consultancy Services, HCL Technologies and Tech Mahindra were up in the range of 1% to 2% on the National Stock Exchange (NSE).

Shares of Welspun Enterprises were trading higher for the 11th straight session, rising 5% to Rs 202 per share on the BSE after the company reported a nearly four-fold jump in its consolidated net profit at Rs 253 million in March quarter. It had profit of Rs 67 million in the same quarter last fiscal.

The stock of construction & engineering company was trading at its new high rallying 32% from Rs 153 on May 9, 2018. On comparison, the S&P BSE Sensex has dipped 2.4% during the same period. READ MORE

Paul Krugman is joining a growing contingent of economists and money managers from Carmen Reinhart to Mark Mobius in warning of a meltdown in emerging markets.

The Nobel Prize-winning economist said the current episode bears some resemblance to the Asian financial crisis in the late 1990s, when developing-nation stocks slid 59 per cent and governments raised interest rates to exceptionally high levels. READ MORE

12:33pm

Tata Motors hits lowest level since February 2016 on weak Q4 results

Tata Motors plunged 8% to Rs 286, its lowest level since February 2, 2016 on the BSE in early morning trade, after the Tata Group Company reported a consolidated net profit of Rs 21.75 billion against an average analysts estimates of Rs 42.30 billion for the March quarter (Q4FY18). The company’s profits for the March quarter nearly halved from Rs 43.36 billion in year ago quarter, due to higher expenses and a one-time impairment charge. READ MORE

Tata Motors posted broadly in line March-quarter performance on the back of strong performance of its India business and steady margins for its British subsidiary Jaguar Land Rover (JLR). Consolidated revenues rose 18 per cent due to a 34 per cent increase in India volumes, while JLR, which accounts for three quarters of consolidated revenue, reported a 2.2 per cent increase.

The management attributed 10-11 per cent of the increase to the volume and product mix, and the rest to translation gains. READ MORE

Grasim continued its strong show in the March quarter (Q4), with its core businesses viscose staple fibre (VSF), chemicals and pulp as well as fibre reporting an improved profitability. In fact, its standalone operating profit and adjusted net profit (excluding exceptional items — loss of Rs 2.19 billion) saw growth of 70 per cent and 67 per cent, respectively.

Revenue growth of 60 per cent came ahead of analysts’ estimates. After an initial fall, the Grasim stock closed higher on Wednesday. READ MORE

11:03am

Jet Airways hits fresh 52-week low on net loss of Rs 10-billion in Q4

Shares of Jet Airways have slipped by 8% to Rs 386 per share, their fresh 52-week low on the BSE in early morning trade, after the airline company reported a standalone net loss of Rs 10.36 billion in March quarter (Q4FY18), due to higher fuel cost. It had posted a net profit of Rs 6.02 billion in the same quarter last fiscal. READ MORE

10:46am

Mark Mobius sees more pain ahead for emerging markets

Even the normally bullish Mark Mobius says there's worse to come for emerging markets. There's a danger of contagion from the deteriorating situation in Turkey, and Argentina and Brazil aren't doing well, said the veteran developing-nation investor, who left Franklin Templeton Investments earlier this year and set up Mobius Capital Partners LLP. READ MORE

10:28am

ICICI Securities on Bajaj Electricals

Management expects strong top-line growth in FY19 given robust EPC order book and 10-15% growth in CD segment. Due to sharp decline in CFL demand and poor outlook, company booked one-time write down of Rs894mn in value of its investment and loans to Starlite Lighting Ltd. We maintain SELL with revised target price of Rs375 (Rs290 earlier), valuing CD and EPC businesses at 30x and 10x FY20 EPS, respectively.

10:24am

ICICI Securities on Just Dial

Though we expect JD to provide capital return of ~5% on the CMP in FY19 (likely through a buyback), we see no reason for the company to not return a higher proportion of annual free cash flow back to investors than it has in recent years. Existing cash balances are already large enough to take care of any incremental business investments in adjacencies and acquisitions.

Tata Motors’ profits for the March quarter halved, as higher expenses and a one-time impairment charge singed earnings, the Tata group flagship said on Wednesday.

For the three months to March, net profit fell to Rs 21.76 billion — way below Street estimates. A Bloomberg poll of 16 analysts estimated a net profit of Rs 37.48 billion on net sales of Rs 881.96 billion. The carmaker reported a net profit of Rs 43.36 billion in the same quarter a year earlier. READ MORE

EARNINGS IMPACT

09:44am

Sharekhan on Grasim

We have fine-tuned our standalone earnings estimates for FY2019-FY2020. On a consolidated level, we see an improvement in the growth outlook of UltraTech, while AB Capital is expected to maintain a strong growth momentum due to its leading position in key verticals such as insurance, asset management and retail lending. Consequently, we maintain our Buy recommendation with unchanged price target of Rs 1,480.

The government’s annual budget for fiscal year 2019 provides support for prices of agricultural produce to be increased to 50% mark-up over costs. That has made the Reserve Bank of India and other market participants wary about the risks to food inflation. Bloomberg Economics’ agriculture input cost index shows that these concerns might be overdone. READ MORE

09:19am

Sectoral Trend

09:18am

Top Sensex gainers and losers

09:16am

Markets at Open

At 9:16 am, the S&P BSE Sensex was trading at 34,440, up 95 points while the broader Nifty50 index was ruling at 10,461, up 31 points

09:05am

Emkay Global on Ramco Cements Limited

We raise FY19/20E EBITDA estimates by 6.5%/6.7% due to higher volume assumptions. We expect EBITDA CAGR of 12.6% over FY18-FY20E. We upgrade the rating to ACCUMULATE with a target price of Rs864, (15x FY20E EV/EBITDA)

09:04am

MARKET COMMENT

The minutes of the May 01-02 meeting of the FOMC, in which the target range for the federal funds rate was left unchanged and only a few tweaks to the monetary policy statement were made, shed some light on why the FOMC decided to emphasize the symmetrical nature of its inflation target.

Our interpretation of this remains that the FOMC may eventually see the need for some wiggle room. There is a good chance that inflation will move to above target levels for at least a couple of months due to cost push factors, while wage pressures are most likely to remain modest.

We continue to think that the majority within the FOMC is inclined to hike at every quarterly meeting – i.e. March, June, September and December – if market conditions and economic data tolerate. This would mean that there are three more hikes in the pipeline for this year, even though the dot plot currently still points at two.

(Source: Rabobank International report)

File photo of US Federal Reserve. Photo: Shutterstock

09:02am

Anand Rathi Institutional Research on Dalmia Bharat

Benefiting from its dominant position in the East and continuously surpassing industry volume growth, Dalmia reported its highest ever PAT. Further, its proposed capacity expansion, various cost-optimising measures and synergies from the OCL merger would lead to expanding of its bottomline and return ratios. As one of our top picks, we retain our Buy recommendation on Dalmia, with a target of Rs 3,402

09:01am

Anand Rathi Institutional Research on Sonata Software

IT services growth is likely to persist through FY19. Margins are likely to inch up further due to currency. For IT products, growth is uneven but the RoCE and absolute EBITDA growth would be maintained. We raise our target to Rs 380 (15x FY20e PE), reflecting changes to our currency assumptions, resulting in higher earnings estimates. Also, we retain a Hold as the prevailing price leaves little room for execution error. Awaiting a better entry price. Risk. High client concentration.

Motherson Sumi’s (MSS) Q4FY18 consolidated EBITDA at Rs 12.6bn missed our estimate by 10% due to: (1) disappointment in SMR (weak revenue impacted by adverse currency & margin); and (2) lower-than-expected margin for standalone, PKC & SMP. We expect SMP’s margin to improve in FY19 and FY20 as the new plants at Mexico, Kecskemet and Tuscaloosa (potential revenue of EUR1bn at full capacity) ramp up in FY19.

Lower capex guidance of Rs 17-20bn for FY19 (Rs 30bn in FY18), we believe, will boost free cash flows (FCF). We have lowered our FY19 EBITDA by 4% but our EPS is revised down by 10% to Rs 11.8 to factor in lower profits from associates. We marginally tweak FY20E EPS by 2% to Rs 15. Maintain ‘BUY’ with SOTP-based revised target price of Rs 365 (Rs 375 earlier)

08:47am

Today's picks: From Vedanta to HPCL, hot stocks to watch on Thursday

Vedanta

Current price: Rs 253

Target price: Rs 249

Keep a stop at Rs 255 and go short. Add to the position between Rs 250 and Rs 251. Book profits at Rs 249.

HPCL

Current price: Rs 287

Target price: Rs 282

Keep a stop at Rs 290 and go short. Add to the position between Rs 283-284. Book profits at Rs 282. READ MORE

08:43am

Nifty outlook and top trading ideas by Tradebulls for today

Nifty resumed its weakness after a brief pause in yesterday’s trading session as weakness intensified below the level of 10,470. The crossover in short term averages still indicates further room towards 10,325 zone which is the 61.8% retracement support of its previous up move from 9,950-10,929. The ongoing momentum could only see a reversal incase 10,580 is breach, else expect further weakness during the week.

Hence traders should retain shorts until 10,580 is defended with an expectation of an immediate extension towards 10,325. READ MORE

The SGX Nifty was at 10,466, up 0.43 per cent from the previous close.

08:35am

Asian Markets

Asian shares moved lower on Thursday as investors fretted about new setbacks in US-China trade talks, but negative sentiment was tempered by US Federal Reserve meeting minutes suggesting it would not raise the tempo at which it increases interest rates.

US stocks ended with small gains on Wednesday after minutes from the Federal Reserve's latest meeting suggested higher inflation may not result in faster interest rate hikes.

The Dow Jones Industrial Average rose 52.4 points, or 0.21 per cent, to 24,886.81, the S&P 500 gained 8.85 points, or 0.32 per cent, to 2,733.29 and the Nasdaq Composite added 47.50 points, or 0.64 per cent, to 7,425.96.